You need to place yourself in the role of a financial analyst who has been hired to help your firm identify its financial weaknesses and strengths. The point of a financial analysis is to discuss the financial health and how the firm using its money. Examine if the firm is operating efficiently in comparison to the industry. Find out if the firm has the flexibility to invest in itself. Note what has been changing for the firm. You need to compare the company to its competitors. Indicate whether the firm has a competitive advantage. Make use your knowledge from your previous accounting and finance courses.
The deliverable should be no more than 5 fully-written pages of text plus additional pages for bibliography and exhibits. The references section/bibliography do not count in the page count. If you find that you go beyond 5 pages, that’s fine. You must utilize and refer to your exhibits throughout the report extensively. Remember that your audience is the top executives of the company. The data (numbers and charts) go into tables and figures, write your analysis referring to the data. It is the interpretation which matters. You need to use in-text citations to cite your sources of financial data, with a references section at the end. The report is for a business audience and needs to fit a more business style of writing. Use the following web site for help if you are unsure about business writing style. Here is an example of a business paper in APA: https://owl.purdue.edu/owl/subject_specific_writing/professional_technical_writing/basic_businessletters/index.html . (Hint start by looking at the firms’ 10Ks particularly the description and managerial discussion of financials will help you understand how the firm operates.)
The outline of the financial analysis:
Title
Introduce the company and frame your report (make sure you state the purpose of the report)
Discuss the Income statement and balance sheet (must include 5 years as exhibits)
Discuss the trends for the company
Do these trends echo the industry? If not discuss reasons why. Do the numbers differ from the competitors and why.
Is there anything to be concerned about?
Discuss the Common sized income statement (3-5 years must include as an exhibit)
Discuss the trends
Identify any changes
Discuss if their common sized numbers differ from their competitors and why?
Is there anything to be concerned about?
Do the Ratio Analysis (profitability, liquidity, operating/asset management, debt, industry specific) for the last 3 years. I want numbers.
Compare to industry averages for the last 3 years (identify who is in your average and must include ratios as an exhibit).
Identify the best and worst performing firm in the industry. Explain why.
What has earnings been and how has this effected share price. What do analysts say about the firm meeting its target earnings. What about other firms in the industry?
Identify business units and product categories contribution to revenues and growth or decrease of contribution.
Has the firm announced any moves which will change their cash/debt position. (e.g. acquisitions, licensing deals, divestitures).
Summarize the strengths and weakness based on the analysis.
At the end attach Bibliography and Exhibits. Cite the sources for your numbers.
Remember – Headings, summaries, roadmaps, page numbers. Spelling and grammar count!
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